Do You Worry About Expensive Home Repairs?
Ever wonder about all your expensive appliances suddenly going doomed, the roof deciding it needs to leak, or the pipes springing a leak? Home repair and replacement costs can soar into thousands of dollars. Should you get a home warranty for your new home or even your existing home? In this episode, we will discuss whether you should consider a home warranty when purchasing a new home or even for your existing home Do Home Warranties Protect Your Finances?
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What is a Home Warranty?
A home warranty is a contract covering repairs or replacements on major home systems and appliances that fail due to normal wear and tear. If a covered item breaks down, you must shell out for a service fee, and the home warranty company will coordinate with a contractor to fix or replace the item. These warranties last 12 months, and most are renewable yearly.
What’s Covered and What’s Not?
Home warranties usually cover a variety of big systems like heating, AC, plumbing, electrical, and appliances such as refrigerators, stoves, and washers. They do not include secondary systems like pest control, security systems, and pools most of the time. Do keep in mind, though, that these warranties generally do not cover damage to the finish resulting from abuse or misuse. It will also depend on the policy paperwork at the time for what is and isn't included, but depending on what you're buying into, it should require a solid read. Knowing this information will help you avoid surprises when you file a claim.
What Are the Pros of a Home Warranty?
Let's explore the potential benefits of a home warranty.
- Peace of Mind: Knowing you won't face huge unexpected repair bills can be very comforting.
- Convenience: The warranty company has a network of contractors ready to be dispatched, saving you the hassle of finding repair technicians.
- Budget Protection: Paying a deductible of $50 to $100 is more manageable than covering the entire repair cost, which could be thousands of dollars.
- Increased Home Value: Homes with warranties often sell faster and for more money, signaling quality to buyers.
- Coverage for Older Systems: Warranties can mitigate the risk of older systems breaking down, though it's important to check for any prorated or limited coverage.
What Are the Cons of a Home Warranty?
On the flip side, here are some potential drawbacks of a home warranty:
- Paperwork and Approvals: Filing claims and getting approvals can be cumbersome.
- Issues with Contractor Quality: You might be stuck with whatever contractor the warranty company dispatches, and the quality can vary.
- Exclusions: Many secondary systems and certain repairs are excluded, leaving you to pay out of pocket.
- Cost: The warranty premium, service fee per repair, and annual renewal costs can add up.
- Limited Coverage: There may be caps on the amount paid out per repair or year, which could leave you covering large costs.
How Much Does a Home Warranty Cost?
The national average ranges from $300 to $600 per year. However, costs can vary based on location, the size and age of your home, and the coverage tiers you select (basic versus enhanced).
When Should You Purchase a Home Warranty?
Consider buying a home warranty in the following situations:
- You're buying an older home and want to hedge against the risk of aging systems breaking.
- You're a first-time homebuyer without substantial repair savings built up.
- You're purchasing a foreclosed home and need clarification about the property's condition and history.
- You're a busy family and prefer the convenience of having repairs handled for you.
- Your tight budget limits your ability to cover large, unexpected costs.
- You're looking to increase the resale value of your home.
What Should You Look for in a Home Warranty Company?
If you decide a home warranty is right, do your homework and pick a good provider. Here are some tips:
- Check reviews and ratings online for quality service and value.
- Ensure the company has been in business for many years.
- Look for companies with a network of technicians instead of subcontractors.
- Find out the response time and repair timeline commitments.
- Understand the claims process and any limitations or caps.
- Ask what systems and appliances are covered and excluded.
- Compare annual costs with competitors.
Outro
Put simply; home warranties are meant to cover repairs if and when major systems or appliances collapse, ensuring peace of mind alongside a few caveats. Prices range, so you must do your homework and read the fine print. Ahhh... Philippians 4:19 reminds us: "And my God will meet all your needs according to his glorious riches in Christ Jesus." Praying to the Lord, asking for his wisdom whilst you determine approximately your home and finances. Stay financially savvy, and have a blessed day!
